- Warren Buffett’s Berkshire Hathaway reported its third quarter earnings on Saturday.
- The company of the investor appears to have increased its Chevron stake and increased stock buybacks.
- Berkshire was able to benefit from higher interest rates as well as a stronger US currency.
Warren Buffett’s Berkshire HathawayPubliziert Earnings for the third quarterOn Saturday, fresh purchases were teased ChevronStock, signaling a faster pace for share buybacks in this quarter.
Berkshire has confirmed that it will take care of a portion Occidental PetroleumFrom now on,’s profits are its own. It also disclosed the $1 billion Hurricane Ian cost to its insurance company and the positive effects of higher interest rates on its operations.
These are six key insights from Berkshire’s Q3 earnings.
1. Stock up
Berkshire seems to have increased its Chevron stake in the last quarter.
It revealed that the company’s position in the oil and gas major was worth $24.4 billion at September’s end. At Chevron’s stock prices of $144 and below on September 30, Chevron, it held 161,000,000 shares. This would have made the company worth $23.2 billion.
It may have increased its stake by about 170,000,000 shares last quarter, judging from the discrepancy.
Berkshire might have increased its number-one holding. Apple. It held approximately 908 million shares of iPhone maker at December’s end, and bought nearly 4 million shares in the second quarter.
Based on Apple’s stock price, that stake would have been valued at $126 billion by September 30. Berkshire estimated the position to be worth $126.5 billion. This suggests that it purchased a few shares.
Berkshire saw a $4.7B drop in the cost base of financial stocks. It also experienced a $2B drop in industrial and commercial stocks. The $700M drop was for consumer-products stocks. These declines indicate which parts of the portfolio Berkshire has cut.
2. Bigger buybacks
Berkshire spent $1.05 billion repurchasing shares last quarter. Based on the fall in Berkshire shares outstanding and the average trading prices of Berkshire stock over that period, it seems like the company has spent $500 million more on buybacks.
Buffett and his staff are on track to spend $1.5 billion on buybacks in the current quarter. This would be more than their expenditures in the previous two quarters.
3. Share in Oxy’s success
Berkshire, which acquired Occidental’s 20.9% stake from scratch in 2012, stated that it would use the equity method to account for this holding.
It will report a proportionate amount of the earnings and revenues of the oil-and gas company as its own. There will be a one-quarter lag since Occidental reports its quarterly earnings earlier than Berkshire.
Based on Occidental’s second-quarter financials, this position could generate $2 billion in quarterly revenues and $750,000,000 in net income for Berkshire every three month.
4. Higher rates of interest are a benefit
The Federal Reserve increased interest rates by nearly zero in March and to a range from 3.75% to 4.4% today in an effort to control historically high inflation.
Berkshire was able to earn more interest on its Treasury bills and cash because the US central banks raised rates. In the end, Berkshire’s income from investments and interest soared by 182% to nearly $400million last quarter.
5. Destruction strikes
Florida was battered by Hurricane IanSouth Carolina, Florida, and other US States in the last quarter. Berkshire, which has a number of insurance and reinsurance businesses, lost $2.7 billion after the disaster.
Geico, a Berkshire-owned auto insurance company, sustained losses of $600 millions and other expenses due to the tropical storm. The property-casualty company of Berkshire suffered a $1.9billion loss in its reinsurance arm.
6. Greenback gains
Buffett is known for favoring American stocks like Coca-ColaAnd Kraft Heinz, and has built a huge collection of US companies including the BNSF Railways and See’s Candies.
Berkshire’s domestic focus allowed it to enjoy a $1.2 million pretax gain from the Dollar’s rise against other currencies around the worldThe quarter ended in March. The foreign-exchange gains in the same period 2021 were only $264 million.
Moreover, Buffett’s company notched a $858 million gain from non-dollar-denominated debt. Because of a stronger dollar, the yen debt it issued in order to hedge its investment in five Japanese companies was less costly.
